Ad Tech May Face Breakups If New Law Passed

New law could break up Big Tech

Utah Republican Mike Lee and a group of bipartisan senators took aim squarely at the lucrative advertising businesses of Google and other large platforms this week with The Competition and Transparency in Digital Advertising Act. The bill would prohibit companies with more than $20 billion in ad revenue from playing in more than one part of the market.

For example, companies can’t own a digital ad exchange if they also sell ads. Companies with at least $5 billion in ad revenue would also face new rules, including requirements to act in their customers’ best interests and restrictions on data sharing. If passed, the law would likely impact the ads businesses of Google, Meta, and Amazon with some type of divestiture, and force a wider swath of digital advertising companies to operate more transparently.

Many of the world’s largest platforms have inherent conflicts in their business models that arise when they want to play in more than one side of their market. Spotify, for example, sees itself as a tech company that is expanding into the media space. Amazon faces a similar challenge with its AmazonBasics product line, which competes with other brands in its marketplace, where it can control search results to promote its own products. These complications have similarly inspired legislation in other countries to curtail the dominance of the big platforms. Let’s revisit a previous One that explores what happens when the lines between owning and distributing blur.

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